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COVID-19 Liability and Workers' Compensation

JUNE 2, 2020

In the insurance industry, we think about risk every day. These risks include things like fire, theft, wind damage, slip and falls, and a myriad of other claims. As businesses start to re-open, many owners are thinking about a whole new set of risks; What if a customer claims they contracted COVID-19 while visiting my restaurant, store, or office? What if one of my employees becomes infected, will their bills be covered by workers comp? 
 
Let’s start with a customer claiming they contracted COVID-19 at your business and they file a lawsuit seeking damages, will my insurance policy respond? First let me say that each claim is different and the details of the claim would be reviewed to determine applicable coverage, with liability claims there is rarely a simple yes or no answer, most of the time the answer to these hypothetical questions is “it depends”.
 
Most businesses have a Commercial General Liability or similar policy that provides coverage for “bodily injury” caused by an “occurrence”.  For a claim to be covered there needs to be legal liability; negligence on the businesses part that causes an injured party to suffer damages. Knowingly allowing (or requiring) a sick employee to work or failing to follow guidance from State or Federal Centers for Disease Control which leads to a customer contracting COVID-19 could be examples of negligence that lead to potential legal liability for your business. 
 
The second item is there must be an “occurrence”, this is defined in the policy as an accident.  Is someone contracting COVID-19 at your business an accident? No one really knows the answer to this as there have not been court cases yet so this brings us back to our original answer of “it depends”.
 
From there we move to exclusions and there are a couple that could apply, specifically the Expected or Intended Injury exclusion. In the scenario above of an employer allowing (or requiring) a sick employee to work, that employee infecting others may be considered an Expected Injury which could trigger the exclusion. Some insurance policies also include a Communicable Disease Exclusion, if this is included in your policy it almost certainly negates any hope of coverage. We will likely see more insurance companies add the Communicable Disease Exclusion to limit their exposure to these types of claims. 
 
The bottom line is there is no definitive answer on the liability question as there have been very few suits brought relating to these situations and it will likely be months before these cases are reviewed. Below is a link to a very good article from the Independent Agents Association which provides much more detail on COVID-19 related liability issues.
 
This quote from the article stands out - “To be direct, the likelihood a business owner may be held legally liable for injury to a third party who contracted the coronavirus on the insured's premises is very low to almost non-existent. Thus, it is unlikely the CGL will be called upon to respond. But the lack of legal liability doesn't stop people from trying to sue to prove negligence and legal liability – especially in the face of irrationally.” – Chris Boggs
 
When we turn our focus to employees the answer doesn’t get any clearer. For a claim to be covered by workers comp the illness or disease must be occupational and “caused by conditions peculiar to the work”. The first issue of being occupational is pretty easy to meet provided the employee can prove they were infected at work. The second part of being “peculiar to the work” is more difficult. A medical professional contracting COVID-19 while working with infected patients would be an example but an office worker who catches the virus from a fellow employee likely would not be.
 
While COVID-19 is certainly different than anything else we have dealt with in the past the requirements for insurance to respond to claims remain the same. If an employee catches the flu from a co-workers that likely is not a workers' comp claim and the same would apply for COVID-19. Several States have passed legislation to handle COVID-19 cases differently and we expect to see more of this as the country moves towards re-opening. As with all injuries or illnesses to employees claims should be reported to your worker's comp carrier for review, do not assume they will not be covered.
 
Our best advice to business owners is to follow the regulations for reopening carefully, take guidance from the Centers for Disease Control (CDC) on best practices for your company, document these procedures, communicate them to all employees and update them frequently as things will almost certainly continue to change as we learn more about COVID-19. For more information and a sample Pandemic Recovery Safety Plan Template from our partners at MEMIC click the link below. 
 
MEMIC - Pandemic Recovery Safety Plan 
COVID-19 and Workers Comp Article from the Big I

Coronavirus and CGL

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